For the first time since the 1970s, food is becoming less affordable.
Last year, the average U.S. family of four was hit with $2,000 in increased food costs, according to a study released Tuesday by FarmEcon, LCC. This dramatic change in food affordability is due in large part to booming prices for corn—a key ingredient in animal feed and staple consumer foods—brought on by the Renewable Fuel Standard (RFS).
The study predicts even greater food costs in the year ahead. With the RFS intact and high prices expected for major crops through mid-2013, Americans are likely to see another substantial increase in the food bill.
This increase in food spending is diverting consumer dollars away from discretionary items. Less money flowing into other economic sectors is contributing to the slow rate of improvement in unemployment, job creation and total U.S. income.
Aside from major, unlikely increases in corn production, the study advises, food affordability relief could only be achieved by lowering the ethanol production incentives created by the RFS.